Backers Working On New Plan For Payson Campus

ASU still ‘determined’ to educate students in Rim Country

Arizona State University officials say they’re still determined to build a campus in Payson and hope to come up with the latest backup plan within weeks.

“We’re determined to get it done,” said Arizona State University Senior Vice President Richard Stanley.

“We’ll be talking intensively over the course of the next few weeks to figure out what the right track is.”

Stanley this week said despite the stumbling blocks strewn in the path of the plan by the governor’s veto, “We are still hopeful we can find a way to get this done. The approach will be different and we’ll have to sort out what the approach will be. But it’s not dead — not at all.”

Stanley declined to offer details of a recently completed, $100,000 marketing study of the campus. “I’m not going into any details,” he said, “but I would say that the preliminary analysis would be that there’s no reason for us to stop working on this.”

Payson Mayor Kenny Evans spent much of the week in meetings with private financial backers and ASU officials, trying to keep the plan for a 6,000-student undergraduate campus alive, despite Gov. Jan Brewer’s veto of a key piece of legislation last week.

The vetoed legislation would have allowed ASU to join with Payson in creating a Separate Legal Entity (SLE). That special district could have then built the campus as well as things like a convention hotel and a research park. Money from those satellite facilities would then be used to keep tuition as low as possible.

The legislation sponsored by Sen. Sylvia Allen (R-Snowflake) won big majorities in the House and Senate, but provoked a shocking veto, by the governor. Brewer cited potential “unintended consequences” in allowing universities to participate in SLEs.

Allen said the governor’s action made little sense. “I had a conversation with Richard Bark in the governor’s office. He was very apologetic about vetoing that bill.

Photo by Andy Towle

Sen. Sylvia Allen

“They want to work very much with the town of Payson and help them any way they can, but they had a very difficult time understanding why this was needed and felt (Evans) could still go forward and do things without this bill.”

However, she said the Legislature will likely remain in recess until January and so cannot consider a veto override, unless the governor calls a special session and agrees to put that topic on the agenda.

Evans this week said the veto will add some $200 million over 20 years to the cost of the project because backers have lost a guaranteed 3 percent interest rate and will likely now have to pay 5 percent interest on the roughly $500 million it will take to build the campus and the related facilities.

Evans said the veto will add costs totaling about $2,000 per student per year. That will make it impossible to cut a deal with ASU that would essentially provide free facilities. The pre-veto plan envisioned tuition at levels equal to federal Pell Grants, or about half the tuition charged at ASU’s Tempe campus.

Currently, ASU charges nearly $9,000 in tuition. ASU also gets another $6,000 per full-time student from the state, a roughly 50 percent decline in the last three years. The Payson campus backers based their pre-veto calculations on tuition of about $5,000 and additional state support of about $3,000 per full-time student.

Evans predicted the backers will work out a way to keep the project alive, although they’ll have to figure out a way to give ASU cut-rate lease rates on the facilities it needs without running afoul of state laws barring the “gift” of public funds even to another public agency. Those laws posed no difficulty if ASU was one of the agencies that formed the SLE.

Payson will now have to find two other public agencies to form the SLE in accordance with existing state law, which could include Gila County or Star Valley or some other non-school agency.

Meanwhile, backers are once more overhauling the master plan to accommodate the higher interest costs, which will require an additional $10 million annually in revenue to repay the loans on the money necessary to build the facilities, said Evans.

The original plan would have generated about $6 million annually in revenues from the college and the associated businesses, which could have allowed ASU to charge half the tuition as at its other campuses.

Lower tuition would play a key role in attracting students to a small, high-tech, rural campus with a limited range of undergraduate degrees and specialized areas like rural health care and “green” technologies.

Evans said the revised plan might feature tuition that’s 75 percent as high as at the other ASU campuses or might scale back some of the facilities.

Sen. Allen said she was angry and frustrated at the last-minute rejection by the governor’s office of a complicated bill that won big majorities in both the House and Senate.

Photo by Andy Towle

Gov. Jan Brewer

“It doesn’t make any sense to me. There were many discussions when this was explained to her and to her staff. I think Mayor Evans talked to her staff many times. And I talked to the staff also. It was a somewhat difficult bill to understand, but I was able to sit and talk to members and once they understood the concept, they were very excited.

“So if I could get other members to understand it, I don’t know why it was so difficult for the governor’s office to understand.

“Either they just didn’t get it or they had some prejudice against the concept.”

The governor’s office did not return calls seeking comment.

However, some observers speculated that legislation would give the Arizona Board of Regents a way to strike up partnerships with counties and towns throughout the state. That could create a new state college system using private loans and grants that would remain under the control of the Board of Regents.

However, earlier this year, the Legislature considered, then shelved, a plan to actually break up the existing university system by setting up a separate governing board for each university.

Advocates of the decentralization plan said breaking up the university system would spur competition and greater efficiency. Critics said it would create a disjointed system with much higher administrative overhead and inadequate support for crucial but expensive programs, like engineering and medical schools.

But Sen. Allen suggested the governor’s advisers simply didn’t understand the importance of ASU’s full participation in the SLE and the huge cost of losing the 3 percent interest rate.

“I was really shocked,” she said. “I just don’t know what these ‘unintended consequences’ could be. The private investors would be the ones holding the liability, which was great. This was a new concept in education. It’s something we need.”